Not fully back in action yet

OUTLOOK/CORPORATE BONDS

The corporate bond market is still in the process of coming back into action.

The policy decision by the government to increase domestic investment in infrastructure is expected to boost the corporate debt market.

However, analysts feel that this will take some time "" at least till the government formally finalises the ways through which funding will be done for core projects.

Further, allowing the Food Corporation of India (FCI) to borrow through market and thereby cutting down on the subsidy is also another route through which debt financing will improve.

At present, FCI procures foodgrains at minimum support prices (MSP) announced by the government.

A consortium of 44 banks provides the working capital required by the FCI to carry out its procurement operations.

The dull run continues in commercial paper

The same story continues for the commercial paper mart as bridge finance seems to have substituted short-term borrowing through commercial paper.

The market largely remained lacklustre with stray deals being executed by unlisted companies.

Mibor-linked papers on the other hand have completely stopped as these are considered to be unlisted.

Therefore, the short-term avenues for corporates to raise funds through the bond route have virtually dried up.

Secondary trades are also not happening and investors are preferring to hold papers till maturity, said a dealer.

Most of the companies that used to approach the commercial paper market frequently are considering listing and till then the market will remain dry, the dealer added.